The Tribune

• Over 250 bank accounts garnished for non-payment

• Inland Revenue targeting $1.6bn collections this year

By Fay Simmons

Tribune Business Reporter

jsimmons@tribunemedia.net

Tax officials say they will begin seizing and selling real estate owned by commercial and foreign real property tax delinquents next month, adding: “We’re dotting all the ‘i’s’ and crossing all the ‘t’s’.”

Shunda Strachan, the Department of Inland Revenue’s acting controller, confirmed that the agency aims to start exercising its ‘power of sale’ in September while adding that it may sell the lien - or charge - secured on delinquent properties rather than go to the extra expense of seizing them.

“The biggest thing relative to real property tax is an amendment to section 25,” she said. “The Department exercising its powers on the power of sale, we’re still doing that. It’s closer than it was. We should have done it already. But we are dotting all the ‘i’s’ and crossing all our ‘t’s’ and we expect to have our first batch of power of sale properties out within the next month by September.

“But what the amendment now does is it allows the Government to sell the lien on properties. So real property tax really has first charge. If you have outstanding real property taxes on properties, the taxes really represent a first charge on that property.

“The chief valuation officer now has the ability to sell the liens. So, we can sell the tax lien to a buyer, someone who wants to buy that lien. And I think that is going to be one of the things that persons need to pay attention to. And we can only do it on foreign-owned properties and commercial properties.”

Ms Strachan also revealed that more than 250 bank accounts held by companies were garnished for non-payment of VAT between April and June 2023. She added that the commercial banks have also incorporated the collection of real property tax into mortgage payments by their borrower clients.

“Generally speaking, we would have garnished more than 250 accounts, let’s say from the month of April to June. But that’s something we consistently do, because it wasn’t like a one-time thing. But it’s something that we’re going to be doing consistently as the need arises,” she said.

“By and large, with the exception of one that I can think of, all of the commercial banks, they have stepped up to the plate. They’ve made the necessary changes to their system. They are including the real property tax in the mortgage process. And that is really helping us to be able to keep the real property tax arrears low in that arena.

“So if you have a mortgage property, then we don’t expect that those properties will have real property tax arrears going forward. The banks again, they stepped up to the plate. They put processes in place. We meet on a regular basis to iron out any concerns that we have. And that process has been flowing quite smoothly.”

Ms Strachan added that the Department of Inland Revenue will not “shy away” from garnishing wages, funds, property or other real estate that is owned by a tax delinquent - but held by another party - to ensure that they see a reduction in arrears.

She said: “So again, the penalties will be stiff. But also we will not shy away from doing things like garnishing. The Real Property Tax Act also now allows us to even garnish for real property tax arrears. Again, that’s something that we didn’t do in the past. We were able to garnish funds. But now we can even garnish property.

“So, for example, if you have arrears for real property tax, we will seek to garnish wages, but we may also seek to garnish property or property that is held by somebody else for you that is owned by you. So, again, we will be doing a lot of things really to step up our enforcement activities. And it’s really to reduce the arrears. “

Ms Strachan said the tax authority is making “good progress” with collecting outstanding VAT, Business Licence and real property tax arrears. She said the Department of Inland Revenue almost made its $1.3bn target last year and will “step it up” this year to ensure its $1.6bn goal is met.

She said: “Relative to the collection of arrears, we’re making good progress. We’re happy to say that last year, our budget or the forecasted revenue for Inland Revenue was $1.3bn. And we just made that or were just a little shy of it. We made a little over $1.2bn and a lot of that is attributed to the collection of arrears.

“We’d like to step it up this year. We don’t have a choice, because there are really no new fees, no new taxes, for us to collect. So what will be critical for the Department in making its $1.6bn forecast this year is really collecting on those arrears.

“We do have extra things like the selling of liens, power of sale. There’s some things we’re going to be doing that we didn’t do before. And it is simply because we really have to, yet again, step it up even more with the collection of the arrears. We did well last year, but there’s still room for us to improve this year.”

Ms Strachan said VAT collection has been “steady” but businesses are still failing to report or file due returns.

“We are concerned with the amount of arrears that we’re seeing; simply non-filing and non-reporting,” she said. “So while collection has been steady, there is a lot of room for us to increase our collections. Because we need to really strengthen and do more enforcement activities to deal with persons that are not filing and not paying their VAT.”

The Department of Inland Revenue audit section has expanded, and is conducting more audits. “Enforcement activities continue and we’re going to be stepping those enforcement activities up,” Ms Strachan said. “Our audit section has expanded, and we are conducting more audits and, from those audits we are discovering that a lot of businesses aren’t paying what they should be paying.

“Again, persons want to avoid those large fines. They can do so simply by filing correctly, paying on time. We are seeing businesses that are operating, but not filing their VAT returns, and that’s a concern.”